The Reserve Bank of Australia (RBA) index of commodity prices hasbeen quite volatile over the past 10 years. However the level of the index has increased substantially since the end of the 1990s, rising from a low of 88.1 in May 1999 to a high of 128.2 in September 2001(on a base of 1994-95 = 100.0). In June 2002, the series recorded 115.7.

RBA INDEX OF COMMODITY PRICES(a) (1994–95= 100.0)

Period

All items

ANNUAL

1998-99

96.7

1999–2000

96.3

2000–01

116.2

2001–02

123.3

MONTHLY

2000–01

April

124.4

May

123.1

June

122.6

2001–02

July

124.2

August

122.6

September

128.2

October

126.1

November

123.1

December

122.8

January

124.7

February

126.6

March

124.7

April

121.7

May

118.9

June

115.7

(a) Monthly average data.

Source: Reserve Bank of Australia Bulletin.

Explanatory Notes

The Reserve Bank of Australia (RBA) developed the commodity price index to provide an early indication of trends in Australia’s export prices. To make the index easier to understand and more relevant the RBA made the following changes to the index in 1998:

the index is now calculated as a fixed-weight Laspeyeres index;

the index was rebased from 1989-90 to 1994-95; and

crude oil was excluded.

The updated index was spliced onto the previous index at July 1989.

There are 17 commodities included in the index representing approximately 75% of Australia's commodity exports. The weights given to each commodity can vary over time to allow for changes in the composition of exports.

Indexes for rural and non-rural components are calculated as well as for total commodities. In June 2000 rural commodities made up 33.2% of the overall index, with beef and veal, wool, wheat and sugar being the main rural commodities. Non-rural commodities make up the rest of the index, with gold, coking and steaming coal, iron ore and aluminium being the main non-rural commodities.

The Government and private enterprise use the RBA commodity price index to predict Australia's export earnings and future economic prospects.

Further Reading

Reserve Bank of Australia BulletinPresents monthly estimates for the Reserve Bank of Australia commodity price index for rural, non-rural and all items. See article in the September 1998 issue for an explanation of the index.

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